Imported Feedstocks! This is the hot topic in both Ag and Energy circles these days. Many are reporting that the current swell of UCO imports have displaced around 330 million bushels of soybeans. This is a very misleading figure. In this post, I will highlight why this is incorrect from a supply and demand standpoint without jumping into deep economic waters such as pricing and credits.
◾ Total UCO imports to the US have increased greatly since 2021, now at 3.9 billion lbs YTD (through Sep 2024), per the US Census Bureau. When you take this 3.9 B lbs value and convert to bushels, that is how you get the 330 million bu reported. This misses how S&D balances work and is just using a conversion factor.
So, let's focus on soybean oil supply - which comes from soybean crush facilities.
◾ From the WASDE, soybean crush has been between 2.2-2.3 B bu over the past 2 marketing years. Up until recently, the industry estimate for soybean crush capacity has been about 2.37 B bu/yr. Looking at this data, it is clear that the soybean crush industry is running at full capacity, making as much soybean oil and meal as it possibly can.
◾ On the demand side for soy oil, food use has been steady since the mid-2000s when the FDA set rules on transfat use in foods, which means that any extra soybean oil that has been produced has been going to biofuels production.
◾ With all of this said, it is misleading to discuss displacement of soybeans from imports of UCO (or any other feedstock for that matter). Those 330 million bushels that many cite are not actually able to be crushed into more soybean oil, and therefore was not displaced.
◾ Taking this a step further: Accounting for all domestic feedstock sources (not just SBO) and accounting for food and feed uses, you end up with around 26 billion lbs of domestic feedstock available for use in BBD production (2023 annual figures). Assuming all of it gets converted to BBD, you end up with 3.3 B gallons that can be produced using only domestic sources. US consumption of BBD was around 4.6 B gallons in 2023, using EPA estimates.
◾ This means imports are necessary to meet domestic demands for biomass-based diesel - whether feedstocks or finished products. This again reinforces that the BBD industry is currently and will have to be a global market going forward.
This is only a simplified look at this very complex market, but it clearly shows that there is more to the discussion of feedstocks than a simple conversion factor would indicate. If you have any comments or questions, feel free to reach out to me to discuss this and other items within the BBD space.
Note: I have included a chart showing that SBO is currently on a record pace for use in biomass-based diesel production. Even with competition from foreign feedstocks, soybean oil use still remains strong.
#BetterCleanerNow #Biodiesel #RenewableDiesel #SAF Clean Fuels Alliance America
